India’s banking sector saw varied Q1FY26 performances across key players, with market attention split between loan momentum and pressure on deposit structures. Broker commentary on Bank of Baroda and Bandhan Bank adds further context for investors navigating the evolving financial landscape.

Bank of Baroda’s domestic loan growth cooled to 12.4 per cent YoY from 13.7 per cent last quarter, while domestic deposits grew by 8.1 per cent, down from 9.3 per cent. With a loan-to-deposit ratio (LDR) at a high 82 per cent, funding risks are becoming more evident.

Morgan Stanley retains an underweight rating with a target price of Rs 235, citing the bank’s elevated LDR and slowing deposit intake as key risks. Nomura maintains a neutral stance, also targeting Rs 235 and noting growth needs to be supported by stronger funding. Citi remains bullish with a buy recommendation and a target of Rs 310, highlighting potential upside if loan and deposit trends stabilise.

Bandhan Bank reported a steep fall in its CASA ratio to 27.1 per cent, down 430 bps QoQ. Loans were up 6.4 per cent YoY, and total deposits rose 16.1 per cent, but rising funding costs remain a concern. Collection efficiency weakened to 97.7 per cent, reflecting stress in both microfinance and retail portfolios.

Nomura retained a neutral rating with a target of Rs 165, citing the CASA drop and collection challenges as headwinds for margins.

RBL Bank delivered an encouraging update, with both total deposits and CASA deposits up 11 per cent YoY, and its CASA ratio steady at 32.5 per cent. This stable deposit mix is expected to underpin margins amid rising competition for funds across the banking sector.

Punjab & Sind Bank showcased strong growth, with gross loans up 13.9 per cent YoY to reach Rs 99,946 crore. Total deposits increased 8.8 per cent, and business volumes rose 10.9 per cent, bolstering confidence in its public-sector performance.

The Q1FY26 set of results highlights divergent paths across lenders. Bank of Baroda's elevated LDR points to possible lending constraints unless deposit flows recover. Bandhan Bank may face rising margins stress due to CASA erosion. Meanwhile, RBL Bank's stable deposit base and Punjab & Sind Bank’s robust credit trajectory stand out positively.

With Q1 earnings continuing, investors should focus on loan-to-deposit ratios, deposit mix, CASA trends, and broker target outlooks to assess risk and return potential in key banking stocks.